Inside Whitehall: The problem with hospitals

If a few hospitals are in trouble financially, it’s their problem. But if lots of hospitals are...

Share

It was John Maynard Keynes who first made the wry observation that: “If you owe your bank 100 pounds, you have a problem. But if you owe a million, it has.”

It is an observation that proved apt in the financial crisis and now could become so again – except this time with the Government in the role of the banker and the NHS in the role of debtor. There is now more concern there about the financial outlook than at any time since the start of austerity.

Some have a vested interest in highlighting problems but others do not. And the message is consistent: that over the next 18 months the NHS is facing an unprecedented combination of challenges that, if not managed effectively, could become the dominant issue in next May’s election.

The first problem is the predictable one of austerity. While the NHS has not been subject to spending cuts, a growing elderly population and new treatments mean managers having to find savings to stand still. For most of the past four years these pressures have been absorbed. Waiting times, in general, have not increased while most hospitals have been able to operate within their budgets.

But the latest figures show the situation is now deteriorating. In the final quarter of last year four-hour A&E targets were not achieved while there was also deterioration in performance against waiting-time targets, particularly for cancer patients.

Forty trusts reported deficits for the year – 21 more than planned a deficit and almost double the number of trusts who were in debt the year before. This has been driven in part by rising staffing costs as a result of the new emphasis on minimum nursing levels.

It has also been affected by a, so-far, inexplicable increase (of around 6 per cent) in the number of patients being referred to hospital by their GP.

What worries managers and politicians is what happens if there is a significant outbreak of flu this winter when demand tends to be at its greatest. It is little wonder that Department of Health planning meetings for this eventuality began in January.

But there is an even bigger challenge of the Government’s own making coming in April. That is when £3.8bn currently spent by the NHS gets transferred into a new fund to provide support for older and disabled people to stay out of hospital and remain in their own home.

In theory it is a sensible and laudable idea – and one which in the long term should be better for patients and cheaper for the taxpayer. But the problem is that April will be a cliff edge: hospitals will have significantly to cut their costs in time for 2015-16 and restructure their services to live without the £3.8bn without knowing how quickly demand for their services will fall.

If there is any sort of time lag (or if hospitals fail to restructure their services) then, as one senior health professional put it, “We are in a nightmare scenario”.

And that’s where John Maynard Keynes comes in. At the moment a few hospitals are performing very well financially, a few very badly while most are just about living within the means. For those that are performing badly, that is currently a problem for their hospital boards. But should a majority of hospitals that are currently just about solvent fall into the red then the combined losses would be eye-watering.

And that will be a very serious problem for the Government.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Account Executive/Sales Consultant – Permanent – Hertfordshire - £16-£20k

£16500 - £20000 Per Annum: Clearwater People Solutions Ltd: We are currently r...

KS2 PPA Teacher needed (Mat Cover)- Worthing!

£100 - £125 per day: Randstad Education Crawley: KS2 PPA Teacher currently nee...

IT Systems Manager

£40000 - £45000 per annum + pension, healthcare,25 days: Ashdown Group: An est...

IT Application Support Engineer - Immediate Start

£28000 per annum: Ashdown Group: IT Software Application Support Analyst - Imm...

Day In a Page

Read Next
Emma Watson has become the latest target of the 4Chan nude hacking scandal  

What is 4Chan? And why does it threaten women like Emma Watson?

Memphis Barker
Chuka Umunna was elected MP for Streatham in 2010  

Could flirty Chuka Umunna be worth a punt for Labour’s top job?

Matthew Norman
Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Lonesome George: Custody battle in Galapagos over tortoise remains

My George!

Custody battle in Galapagos over tortoise remains
10 best rucksacks for backpackers

Pack up your troubles: 10 best rucksacks for backpackers

Off on an intrepid trip? Experts from student trip specialists Real Gap and Quest Overseas recommend luggage for travellers on the move
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world